Student loans have recently taken the forefront in Washington, D.C., and some borrowers in Minnesota could soon see changes in their payments.
President Barack Obama signed an executive memorandum last week expanding the Pay As You Earn program, which will cap loan payments for some borrowers.
Within the next year, students who took out Federal Direct Loans will have their payments capped at 10 percent of their income under the president’s order.
The White House estimates this memorandum will provide payment caps for 5 million borrowers.
Several Minnesota leaders have been vocal in the national discussion on student loans, which are becoming an increased burden nationwide.
“The student loan debt is just overwhelming,” said Jay Kiedrowski, a senior fellow at the Humphrey School of Public Affairs.
Minnesota ranks fourth in the country for student debt — with an average of $31,497 per undergraduate student, according to the Institute for College Access and Success’ Project on Student Debt.
“Student loans cost too many Americans a chance at a higher education, and student debt is crushing many graduates in Minnesota,” said a spokesperson for Rep. Keith Ellison, D-Minn.
Just days after Obama’s expansion of the Pay As You Earn program, a Senate bill that would have allowed student loan borrowers to refinance at lower interest rates failed by four votes.
Minnesota Sens. Amy Klobuchar and Al Franken backed that measure, which would have given an estimated 561,000 Minnesotans the option to refinance student loans.
The Senate is expected to take up the bill again at a later date.
Andrew McNally, a graduate student and president of the Council of Graduate Students at the University of Minnesota, said he has avoided taking out student loans in his final year of school and knows many other students who are struggling financially.
He said he thinks policymakers need to look beyond refinancing student loans.
Instead, he said they should focus on tuition freezes and diversifying loan options.
“What I hope for is a really broad-ranging conversation about how higher education is funded and financed in general,” McNally said. “It seems like this might be a good step, but even if it is, it’s a Band-Aid.”
